Money & Wealth

The theory of money & wealth

The individual pursuit of wealth is what drives the global economy.

This driving force of human nature is the reason for the post-Second World War fall of communism and the success of capitalism.

Scottish Philosopher, Adam Smith, was one of the first to understand this drive. He published An Inquiry into the Nature and Causes of the Wealth of Nations in 1776. It revolutionised the thinking behind internal and global trade.

The first edition of the book sold out in six months, mainly to an enthusiastic political class.

And it forms the backbone for the modern field of economics even today.

The central theory rests upon the fact that people, left to their own devices, create efficient means of trade.

It is not some central authority that dictates the outcome.

This is sometimes referred to as ‘the invisible hand’ of the marketplace.

But here is the crucial finding.

Various independent parties working unhindered in their own self-interest, in an environment of competition, will result in a better outcome for all participants.

The threat of money & wealth

Over the last six decades the world has moves steadily towards Smith’s ideal.

Trade agreements have grown, protectionist barriers have reduced.

The western world is richer than it has ever been. A demonstration of the truth behind the wealth building power of the free markets to benefit not just the few but the many.

But the world is on the edge of forgetting these inherent truths.

Political instability is rife, created by a sense of unequal wealth distribution in some quarters. Populist politicians are on the rise, capitalising on this feeling.

We are not robots — and because many of us want both growth and value — many stock portfolios bear little resemblance to the way we are supposed to invest. For those of us looking for income out of the stock market, it can be a trap to worry too much about investing styles.

Australian super is in a marvellous spot right now. It’s now a $2.3 trillion industry and is expected to reach $3 trillion in three years’ time. But the big unknown in all of this is politics. Especially with a recent surge of populist figureheads showing up around the world.

The global economy’s absolute dependency on central bank stimulants for growth has created the illusion of strength. But, in reality, it’s weakened the system to the point where our financial wellbeing is highly vulnerable to even the slightest of economic ills.

How much money do we want to make? As much as possible of course. While things aren’t looking the best for institutional investors, individual investors can still make amazing returns in the stock market.

The notion of a comfortable retirement was a product of the Industrial Revolution. The middle class is under threat. Comfortable retirements are no longer a rite of passage. Those who are planning on tomorrow being a carbon copy of yesterday, will have many years to lament what went wrong.

If prior experiences are a guide, then the US market — and by extension the rest of the world — is in very dangerous territory. There’s never been a more pressing time to take action in protecting your wealth.

Testimonial

Just thought I would let you know that whilst I receive countless financial emails daily I view yours as something special. I am not looking for the same old humdrum I am looking for news that is out of left field. Now you guys would be off the planet if you went any further left but it is refreshingly different. I get through the humdrum first and get my mind sorted and save you for last as a check. It is certainly an insane moment in time but I am still finding investment opportunities. Thanks for your comments